2012 annual review - stryker stryker 2012 annual review. 1 2 3 4 5 6 8 9 10 11 12 7 10 11 12 the...

Stryker Corporation

2825 Airview Boulevard

Kalamazoo, Michigan 49002

269 385 2600

stryker.com

2012 annual review

DIVISION LEADERS

Xavier Berling

President, Europe

Peter Bradley

President, Japan; Interim Vice President & General Manager, Eastern Europe, Middle East and Africa

Sharon W. Brown

President, Performance Solutions

James N. Heath

President, Instruments

William J. Huffnagle

President, Reconstructive

Vivian Masson

President, Osteosynthesis

David A. Murphy

President, Americas

Phillip S. Nicholl

President, Asia Pacifi c

Mark H. Paul

President, Neurovascular

J. Andrew Pierce

President, Endoscopy

Bradford L. Saar

President, Medical

Spencer S. Stiles

President, Spine

Brian J. White

President, Sustainability Solutions

ADDITIONAL INFORMATION

Independent Registered Public Accounting FirmErnst & Young LLPGrand Rapids, Michigan, U.S.

Transfer Agent and RegistrarAmerican Stock Transfer & Trust Company, LLCNew York, New York, U.S.

Shareholders needing information regarding their certifi cates or dividends should contact:American Stock Transfer & Trust Company, LLCOperations Center6201 15th AvenueNew York, NY 11219800 937 [email protected]

Investor ContactKatherine A. OwenVice President, Strategy and Investor Relations

Media ContactYin C. BeckerVice President, Communications & Public Aff airs

Business Development ContactBryant S. ZankoVice President, Business Development

Annual MeetingTh e Annual Meeting of Shareholders of Stryker Corporation will be held at the Radisson Plaza Hotel & Suites at Th e Kalamazoo Center in Kalamazoo, Michigan, on Tuesday, April 30, 2013, at 2:00 p.m. ET.

Stock ListingTh e company’s common stock is traded on the New York Stock Exchange under the symbol SYK.

Form 10-KTh e company fi les a Form 10-K each year with the Securities and Exchange Commission. Shareholders wanting a copy of the 2012 report may obtain it free of charge at www.stryker.com or request one by writing to:Investor RelationsStryker Corporation2825 Airview BoulevardKalamazoo, MI 49002

TrademarksTh e following trademarks or service marks of Stryker Corporation, its divisions or other corporate affi liated entities appear in this annual review: Complete Stroke Care, GetAroundKnee, Stryker, Surpass, System 7. All other trademarks or service marks are trademarks or service marks of their respective owners or holders.

Th e products referenced within this review may not all be approved or cleared for sale, distribution or use in all countries.

Diversity and InclusionStryker values an inclusive work environment that hires and engages a talented and diverse workforce. Achieving the full potential of this diversity is a business priority that is fundamental to our competitive success. We encourage and expect each employee to embrace our commitment to an inclusive workplace that is free from any kind of discrimination, retaliation or bias.

CHAIRMAN EMERITUS

John W. Brown

Chairman Emeritus and former Chairman, President and Chief Executive Offi cer of Stryker Corporation

CORPORATE OFFICERS

Kevin A. Lobo

President and Chief Executive Offi cer

Steven P. Benscoter

Vice President, Human Resources

Dean H. Bergy

Interim Chief Financial Offi cer and Vice President, Corporate Secretary

Jeanne M. Blondia

Vice President and Treasurer

Scott P. Bruder, M.D., Ph.D.

Vice President, Chief Medical and Scientifi c Offi cer

Lonny J. Carpenter

Group President, Global Quality and Operations

David K. Floyd

Group President, Orthopaedics

David G. Furgason

Vice President, Tax

Curtis E. Hall, Esq.

Vice President and General Counsel

Tony M. McKinney

Vice President and Chief Accounting Offi cer

Anne L. Mullally

Vice President and Chief Compliance Offi cer

Katherine A. Owen

Vice President, Strategy and Investor Relations

James B. Praeger

Vice President, Finance Training, Development and Internal Audit

Timothy J. Scannell

Group President, MedSurg and Neurotechnology

Elizabeth A. Staub

Vice President, Regulatory Aff airsand Quality Assurance

Ramesh Subrahmanian

Group President, International

LEADERSHIP

De

sig

n b

y A

dd

iso

n

ww

w.a

dd

iso

n.c

om

P

rin

tin

g b

y In

no

vati

on P

rin

tin

g &

Co

mm

un

icat

ion

s

financial overview

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2012 2011 % Change

Net sales $ 8,657 $ 8,307 4.2

Earnings before income taxes 1,705 1,686 1.1

Income taxes 407 341 19.4

Net earnings 1,298 1,345 (3.5)

Adjusted net earnings² 1,560 1,448 7.7

Diluted net earnings per share of common stock:

Reported $ 3.39 $ 3.45 (1.7)

Adjusted¹ 4.07 3.72 9.4

Dividends paid per share of common stock $ 0.85 $ 0.72 18.1

Cash and current marketable securities 4,285 3,418 25.4

¹A non-GAAP fi nancial measure. Th e most comparable GAAP fi nancial measure is diluted net earnings per share, which were

$2.44, $2.78, $2.77, $3.19, $3.45 and $3.39, in 2007, 2008, 2009, 2010, 2011 and 2012, respectively.

² A non-GAAP fi nancial measure. The most comparable GAAP fi nancial measure is net earnings.

For a reconciliation between these measures, refer to our Annual Reports on Form 10-K available on our web site at

www.stryker.com or at the SEC’s web site at www.sec.gov.

adjusted dilutednet earnings1

$ per share

dividends paid$ per share of common stock

cash flow provided by operating activities$ billions

’12’07

2.40

2.83 2.95 3.

33 3.72 4.

07

0.0

2.0

1.0

3.0

4.0

’12’07

0.22

0.33

0.50

0.60

0.72

0.85

0.0

0.6

0.3

0.9

’12’07

1.0

1.2

1.5

1.5

1.4

1.7

0.0

1.0

1.5

2.0

0.5

0.0

3.0

6.0

$8.7b

’92 ’12

FINANCIALHIGHLIGHTS

history ofrevenue growth$ billions

RESULTS

With close customer relationships, a deeply

rooted culture of ethics, and a bias for action,

we continued our legacy of delivering solid

fi nancial results. Despite the challenging

marketplace, we grew revenue to $8.7 billion

in 2012, an increase of four percent, and

our adjusted diluted net earnings per

share increased nine percent. Our robust

balance sheet was further strengthened

by 2012 operating cash fl ow of $1.7 billion,

demonstrating our consistent ability to

generate strong cash fl ow.

Most of our U.S. businesses accelerated in

2012, with particular strength in reconstructive,

instruments and sustainability solutions.

Internationally, we achieved strong double-

digit growth in emerging markets and are

pleased with our neurovascular business,

which also had double-digit growth.

Within our three segments — Reconstructive,

MedSurg and Neurotechnology & Spine — we

have a very diversifi ed sales footprint with no

single business in any segment representing

more than 16 percent of total Stryker revenue.

Th is diversity provides good balance for steady

growth and enables us to pursue market

opportunities in many promising areas.

Europe and capital equipment markets were

challenging in 2012, and we had our own

operational issues in Europe, which are being

addressed by a signifi cant transformation

initiative. We expect this program to return

our European business to market growth rates

KEV I N A. LO B O

President & Chief Executive Offi cer

LETTER FROM THE PRESIDENT AND CEO

4%Despite the challenging marketplace, we grew revenue to $8.7 billion in 2012, an increase of four percent.

D E A R S H A R E H O L D E R SSince being named President and CEO on October 1, 2012,

I have had the pleasure of meeting thousands of employees

across the Company and many of the customers that we serve.

It has been a humbling and exhilarating experience to see

the passion and excellence that our teams put forth in support

of our customers to advance the health of patients. Our

tradition of high performance continued in 2012, a year of

signifi cant achievements.

1

towards the end of 2013. In capital equipment,

we are focused on driving innovation to capture

market share, which will further benefi t us

as market conditions improve.

As a strong and diversifi ed medical technology

company, we hold leading positions in the

majority of our markets. Our eff orts to drive

innovation, globalization and cost optimization

will ensure that we are well positioned to

continue this leadership in the years ahead, and

our balanced approach to capital allocation

will fuel shareholder returns.

INNOVATION

Our relentless focus on innovation remains

a cornerstone of our success, driven by our

enduring collaboration with hospitals and

healthcare providers, which ensures that we

fully understand their practice environment,

treatment protocols and unmet needs. Th is

enables us to continue to consistently develop

and market a range of life-enhancing and life-

saving products that drive improved outcomes

as well as cost savings and effi ciencies.

Very few companies can match our product

breadth and depth, which allows us to

bring value to three key hospital service lines:

orthopaedics, neurosciences and general

surgery. We are also building upon our

traditional product development strength by

expanding our defi nition of innovation to

include procedures and marketing techniques

that improve the patient and customer

experience. One example is our successful

direct-to-consumer campaign for our

GetAroundKnee System, which has helped

to educate consumers about the advantages

of our technology and generate above-

market growth.

GLOBALIZATION

Globalization remains a signifi cant opportunity,

as U.S. sales represent about 65 percent of our

total revenue. Th is percentage has remained

fairly consistent over the last 10 years, and

currently, only six percent of total company

sales are in emerging markets. We are focused

on accelerating international growth by:

» Leveraging our excellent existing product

portfolio in the markets we serve

» Capturing market share in

developed markets

» Building scale in emerging markets such

as China and India, where Stryker has

historically grown well over 20 percent

per year

We are pleased with the benefi ts of our

acquisitions, including our neurovascular

business, which performed well globally

in 2012, successfully integrated Concentric

Medical and completed the acquisition of

Surpass Medical. We are now positioned to

be the Complete Stroke Care leader in a

growing and dynamic market.

We are also poised for improved growth in

emerging markets with our recently announced

acquisition of Trauson Holdings, a leading

player in the trauma and spine value segments

in China. Trauson will not only broaden our

presence in China, but provide a platform

for serving the value segment across other

emerging market countries.

COST OPTIMIZATION

Meanwhile, our global quality and operations

organization continues to drive improvements

in our cost structure and asset utilization. We

are in year one of an initiative to achieve

C O N T I N U E D L E T T E R F R O M T H E P R E S I D E N T A N D C E O

GLOBALIZATIONremains a signifi cant opportunity for Stryker.

2 Stryker 2012 Annual Review

1

2

3

45

6

8

9

10 11 12

7

1

2

3

45

6

8

9

10 11 12

7

THE BREADTH OF STRYKER

RECONSTRUCTIVE

Th is segment includes knees,

hips, trauma & extremities, and

other products such as foot &

ankle, joint preservation (sports

medicine) and orthobiologics

& biosurgery.

MEDSURG

Th is segment includes

instruments (power tools &

surgical accessories and computer-

assisted surgery), endoscopy (minimally

invasive surgical solutions and integration

& connectivity), medical (patient care, patient

handling and emergency medical services equipment),

and sustainability solutions (reprocessing and remanufacturing).

NEUROTECHNOLOGY

& SPINE

Th is segment includes spinal implants,

neurovascular, NSE (neuro,

spine, and ear, nose & throat),

craniomaxillofacial, and

other products such as

interventional spine.

RECONSTRUCTIVE: 44% OVERALL

1. Knees: 16%

2. Hips: 14%

3. Trauma & Extremities: 11%

4. Other: 3%

MEDSURG:38% OVERALL

5. Instruments: 15%

6. Endoscopy: 13%

7. Medical: 8%

8. Sustainability Solutions: 2%

NEUROTECHNOLOGY & SPINE: 18% OVERALL

9. Spinal Implants: 8%

10. Neurovascular: 5%

11. Neuro, Spine & ENT: 3%

12. Craniomaxillofacial: 2%

3

$500 million in cumulative cost savings over

fi ve years by optimizing our network and

supply chain.

Th is sweeping initiative started with an

organizational change that centralized

functions once directly managed by our

divisions. Th is has progressed very well, and

we are on track to meet our savings goals,

which include an annual three to fi ve percent

reduction in our cost of goods sold. We are

also expecting a working capital improvement

of over $250 million, including a roughly

30-day improvement in our days of inventory

on hand. In addition, we began implementing

shared services initiatives to drive improved

earnings leverage.

CAPITAL ALLOCATION

We are committed to a balanced capital

allocation approach with acquisitions,

dividends and share repurchases — in that

order of priority. Acquisitions are fi rst in

line because our growth strategy continues to

identify promising acquisition opportunities

to improve shareholder value.

In 2012 we focused on integrating the

companies we acquired in the previous two

years, and continued to pursue many other

acquisition opportunities. We will continue to

follow a disciplined approach to acquisitions,

with a focus on our core and adjacent markets.

We have also been consistently increasing

our dividend. With the announced 25 percent

increase for 2013, our dividends paid per

share will have increased at a compound

annual growth rate of 38 percent since 2006.

Finally, following a relatively lighter year of

share repurchases in 2012, we have signifi cant

fl exibility going forward with a repurchase

authorization from our Board of Directors of

$1 billion.

LOOKING AHEAD

In 2013 we expect sales growth of 3.0 to

5.5 percent, excluding acquisitions and

foreign exchange, and an adjusted diluted net

earnings per share increase of between 8 and

12 percent, excluding the new Medical Device

Excise Tax (between four and eight percent,

including the tax). In short, we expect another

year of solid fi nancial performance.

We are well positioned to continue to:

» Strengthen our presence and leadership

in our markets around the world

» Grow through innovation, globalization

and acquisitions

» Leverage our breadth and depth

» Deploy balanced capital allocation

Th ese are exciting times for Stryker and the

medical technology industry. It is an honor

to be the President and CEO of this great

Company, and I off er my sincerest thanks

and appreciation to our Board of Directors,

our leadership team and all of our employees

around the world for their support, hard

work and commitment. I am proud of their

extraordinary eff orts to keep our Company

growing as we face the future with optimism.

Sincerely,

KEV I N A. LO B O

President & Chief Executive Offi cer

C O N T I N U E D L E T T E R F R O M T H E P R E S I D E N T A N D C E O

With the announced 25 percent increase for 2013, our dividends paid per share will have increased at a compound annual growth rate of 38 percent since 2006.

25%


W I LLI A M U. PAR FE T

Non-Executive Chairman

LETTER FROM THE NON-EXECUTIVE CHAIRMAN

Kevin has a broad and diverse 25-year

business career that includes executive

positions in general management and fi nance,

with extensive international experience. He

knows the healthcare markets well, he is a

decisive, clear thinker, and he is very engaged

with our employees.

During the search process — directed by Louise

Francesconi, a Board member and Chair of

our Governance and Nominating Committee —

we evaluated Stryker’s opportunities and

challenges, scoured the marketplace for

potential external candidates, evaluated internal

talent, and enthusiastically chose Kevin, who

has been with Stryker long enough to know its

inner workings and results-oriented culture, but

has plenty of outside experience to bring fresh

ideas to the table. Kevin is off to a great start,

and the Board is confi dent that he will meet and

exceed the high expectations our shareholders

place on leadership.

Th e Stryker Board believes that companies

that excel over many years spend lots of time

on strategy — looking closely at how their

industries will evolve and then charting a

course in challenging waters that builds on

their strengths to increase value. Th e Board

also knows that a good strategy requires

successful executives to plan and implement it.

Accordingly, the Board appreciated the

opportunity to work closely with the

management team as the company craft ed an

impressive growth plan — a plan that recognizes

the need for innovative, cost-eff ective healthcare

products, utilizes our keen knack for innovation

and creative solutions, and builds on the

strong relationships we have established with

caregivers. Everything we need is in place.

Before closing, I want to thank Curt Hartman,

who served this company admirably for

23 years. With his vast operating experience

and broad knowledge, he skillfully provided a

smooth transition for Kevin, serving as interim

CEO while remaining CFO from February

2012 until October 2012. We wish Curt all the

best in the future.

Finally, let me acknowledge the incredible

work of the Board this year on behalf of our

shareholders. Corporate oversight of publicly

traded, global companies is an exciting and

challenging task. Th e line between oversight

and managing is not always clearly defi ned,

and can shift with changing circumstances.

Your Board clearly understands its role and

never drift ed from its implicit commitment to

drive shareholder value, while balancing the

needs of 22,000 terrifi c employees, the wonderful

caregivers who use our products and services,

our suppliers and, of course, all the patients who

benefi t from Stryker products.

We thank you, our shareholders, for the

confi dence and trust you place in all of us

at Stryker as we work to drive value for

your investment.

Sincerely,

W I LLI A M U. PARFE T

Non-Executive Chairman

D EAR S HAR E H O L D E R S2012 was a great year for Stryker. We chose a new team leader, ended the year with a solid, more balanced fourth quarter and, based on our eff orts in 2012, we recently announced a bold and exciting acquisition of Trauson Holdings, a major value segment player in China that will greatly strengthen our position in the emerging markets.

How did we achieve all of this?

Our people. Stryker has always been

recognized for its dedicated,

hardworking, caring employees who,

day aft er day, continuously improve

the products that help caregivers and

patients enjoy a better tomorrow.

Teams also need leadership, and Stryker

has been equally fortunate to have had

strong, compassionate, knowledgeable

and respected chief executives. We

are delighted that Kevin Lobo will

carry this tradition forward as our

new President and CEO.

5

100+COUNTRIES

Stryker is a strong player in medtech, with a leadership position in the majority of the markets in which we compete.

OUR BREADTH& DEPTH


o t h e r

k n e e s

h i p s

t r au m a &e x t r e m i t i e s

R E C O N S T R U C T I V E

m e d i c a l

s u s ta i n a b i l i t ys o l u t i o n s

i n s t r u m e n t s

M E D S U R G

e n d o s c o p y

N E U R OT E C H N O LO GY& S P I N E

c r a n i o m a x i l l o fa c i a l

n e u r o , s p i n e & e n t

s p i n a l i m p lan t s

n e u r o va s c u l a r

MANUFACTURING AND

RESEARCH & DEVELOPMENT

LOCATIONS WORLDWIDE

29

59,000+ PRODUCTS & SERVICES

x1,0007

HIPS

PATIENT

HANDLING

FOOT & ANKLE

JOINT

PRESERVATION

ORTHOBIOLOGICS

& BIOSURGERY

TRAUMA &

EXTREMITIES

CRANIOMAXILLO-

FACIAL

INTERVENTIONAL

SPINE

NEURO, SPINE

& ENT

NEUROVASCULAR

SPINAL IMPLANTS

ALSO SOLD FOR OPERATING ROOM USE:

EMERGENCY

MEDICAL

SERVICES

COMPUTER

ASSISTED

SURGERYPOWER TOOLS

& SURGICAL

ACCESSORIES

REPROCESSING &

REMANUFACTURING

MINIMALLY

INVASIVE SURGICAL

SOLUTIONS

INTEGRATION &

CONNECTIVITY

KNEES

PATIENT CARE

AND PATIENT

HANDLINGPATIENT CARE

HIPS

SPINAL IMPLANTS

PATIENT

HANDLING

INTERVENTIONAL

SPINE

JOINT

PRESERVATION

STRYKER’S THREE SEGMENTS

MEDSURG

NEUROTECHNOLOGY & SPINE

RECONSTRUCTIVE

NOTE: NOT ALL PRODUCTS AND SERVICES ARE AVAILABLE IN ALL COUNTRIES.

FOOT & ANKLE

NEUROVASCULAR

CRANIOMAXILLO-

FACIAL

TRAUMA &

EXTREMITIES

KNEES

C


By working together — with patients, clinicians, hospital staff and

administrators, regulatory agencies and payers — we relentlessly seek new

opportunities to enhance patient and caregiver lives around the world.

N

9

E

NANCY FISH (PATIENT) AND WALTER B. BEAVER, M.D., M.S.,

ORTHOCAROLINA HIP & KNEE CENTER, PRESBYTERIAN

ORTHOPAEDIC HOSPITAL, CAROLINAS MEDICAL CENTER-MERCY,

NORTH CAROLINA, U.S.


K N OW L E D G E I S P OW E R F U LWhile knee replacement surgery has become relatively routine, there’s a big diff erence in the

design of implants among manufacturers in the industry. Because Stryker’s GetAroundKnee

System has a single radius, which is similar to a circle, it is designed to replace the knee’s naturally

circular motion. Other knee replacements have oval designs with diff erent centers of rotation.

Given this tangible diff erence, and with direct input from surgeons, Stryker developed an

advertising campaign intended to provide patients with information about their options, associated

clinical evidence and how to contact a surgeon familiar with the GetAroundKnee System.

“People want to know about their recovery and why this knee is diff erent than other knees,”

says Dr. Walter B. Beaver, an orthopaedic surgeon in Charlotte, North Carolina, U.S. Th e

campaign “doesn’t promise; it educates people in a very light way — a little bit of humor and

a little bit of science — which patients seem to really appreciate,” he adds. “More people come

in understanding this campaign than any of the others I know of.”

Dr. Beaver’s patient, Nancy Fish, a middle school teacher, says, “It was helpful to watch the

commercial and see the actual knee moving — that kind of education by a company was diff erent

and really got my attention. Ultimately, it was the best thing that ever happened to me.”

“Another diff erentiating characteristic of the GetAroundKnee campaign,” says Dr. Beaver,

“is that Stryker took the right steps in getting surgeon feedback early on. Th ey have kept the

surgeons informed.”

Now, many people are asking Nancy about her GetAroundKnee. “Th ey are clearly seeing

the campaign, which gets them thinking more seriously about their surgery,” she says.

Since the fi rst TV commercial aired in May 2012, more than a half-million people have visited

the GetAroundKnee web site, www.getaroundknee.com.

500,000+people have visited the

GetAroundKnee web site.

NATURAL CIRCULAR MOTION

Th e GetAroundKnee System has a single radius, designed to replace the knee’s naturally circular motion.

11

B U I L D I N G B E T T E R T O O L STreating a patient is a tough job, requiring intelligence, judgment, patience, attention to detail,

superior skills and stamina. Th at is why Stryker has been working closely with its customers for

30 years to meet those challenges and provide the best reconstructive power tools on the market

for large joint repair or replacement, such as hips and knees. Th is partnership with customers,

such as Dr. Lawrence Morawa, an orthopaedic surgeon from Taylor, Michigan, U.S., led to the

introduction of System 7 — Stryker’s most dependable and highest-performing reconstructive

power tool system to date.

Th e advancements found in System 7 originated from a collaboration between Stryker employees

and surgeons, operating room technicians, nurses and other hospital professionals. Logging

countless hours and thousands of miles, Stryker employees asked many questions, listened and

then used their fi ndings to create a tool that met the needs of Stryker’s various customers.

Th anks to this invaluable collaboration, System 7 is more powerful, easier to use, quieter and

signifi cantly lighter than previous generations. Th e lithium-ion batteries that power the system

have a much longer and more reliable life, which increases operating room effi ciency and

provides an environmentally conscious alternative to traditional nickel-cadmium batteries.

System 7 even includes a Remote Device Management component that is used to transfer

usage data to Stryker support teams who help monitor and recommend maintenance, further

reducing downtime in the operating room.

Ultimately, it is about confi dence. Only customers who are highly confi dent — in their own

abilities and in the reliability and precision of their tools — can do their jobs successfully and

provide what we all aim for: better patient outcomes.

30 YEARSStryker has been working closely with

its customers for 30 years to provide

the best reconstructive power tools

on the market.

WORKING TOGETHER

System 7 originated from a collaboration between Stryker employees and surgeons, operating room technicians, nurses and other hospital professionals.


MATT, A STRYKER ENGINEER, WORKED WITH CUSTOMERS

TO IMAGINE THE NEXT-GENERATION POWER TOOL.

TREVOR, A STRYKER MARKETING PROFESSIONAL, LISTENED TO

CUSTOMER FEEDBACK TO HELP DEVELOP AND REFINE SYSTEM 7.

KATIE, AN OPERATING ROOM TECHNICIAN, PROVIDES BETTER

SUPPORT FOR THE OPERATING ROOM TEAM.

DR. LAWRENCE MORAWA, AN ORTHOPAEDIC SURGEON,

HELPS HIS PATIENTS GET BACK TO DOING WHAT THEY LOVE.

13

DR. JOOST DE VRIES (LEFT), DIRECTOR OF

NEUROENDOVASCULAR SURGERY, UNIVERSITY OF

NIJMEGEN, NETHERLANDS, AND AJAY K. WAKHLOO,

M.D., Ph.D., UNIVERSITY OF MASSACHUSETTS, U.S.


C O M P L E T E S T R O K E CAR E In 2011, Stryker entered the stroke market with the acquisition of its neurovascular business, quickly

followed by acquisitions that broadened its presence in this market with Concentric Medical and then,

in 2012, Surpass Medical. While its other businesses focus on enhancing caregivers’ and patients’ lives,

the neurovascular business focuses on saving lives with a robust off ering for Complete Stroke Care.

“Brain aneurysms are very devastating,” explains Ajay K. Wakhloo, M.D., Ph.D., University of

Massachusetts. “Once ruptured, they can cause death in up to 30 percent of patients, leaving another

30 percent with severe neurological defi cit — memory loss and other stroke-like symptoms. What’s

more, the impact of the disease puts an enormous strain on the patients’ families.”

Th e Surpass Flow Diverter is a game changer for patients, for the market and for Stryker. “It allows

for the treatment of complex brain aneurysms that previously could not have been treated by

standard surgical or minimally invasive endovascular methods,” says Dr. Wakhloo.

Using a unique mesh design and delivery system, fl ow diverters redirect blood fl ow away from the

aneurysm, allowing a stable clot to be formed within the aneurysm pouch. Th ey are approved in Europe,

where their most compelling indication is for giant aneurysms — a condition that has an alarming

probability of rupture within fi ve years in up to 50 percent of diagnosed patients.

Seeing the product’s great potential, Stryker is investing in a pre-market clinical study as a step toward

regulatory approval in the U.S., while also expanding the product line to meet other critical needs. “Th e

development of the Surpass Flow Diverter is a perfect demonstration of how basic science, engineering

and clinical medicine experts share their knowledge and cooperate to solve an important problem,” says

Dr. Joost de Vries, Director of Neuroendovascular Surgery, University of Nijmegen, Netherlands.

23,000,000Th ere are approximately 16M fi rst-

time strokes each year. Th at number is

expected to grow to 23M by 2030.

NEXT-GENERATION TECHNOLOGY

Th e Surpass Flow Diverter is a game changer for patients, for the market and for Stryker.

DD

15

BOARD OF

DIRECTORSRonda E. Stryker ‡

Vice Chair and Director, Greenleaf Trust; Trustee, Spelman College and Kalamazoo College; Vice Chair, Kalamazoo Community Foundation; granddaughter of the founder of the Company and daughter of a former president of the Company

Howard L. Lance ** †

Executive Advisor, Th e Blackstone Group L.P.; Former Chairman, President and Chief Executive Offi cer, Harris Corporation; Director, Eastman Chemical Company; Director, Emdeon Inc.

Allan C. Golston * **

President, United States Program for the Bill & Melinda Gates Foundation

Howard E. Cox, Jr.** †

Partner, Greylock; Member, Harvard Medical School Board of Fellows; Member, investment committees of the Dana Farber Cancer Institute, Partners Healthcare System, Inc. and the Boston Museum of Fine Arts

William U. Parfet * ‡

Non-Executive Chairman, Stryker Corporation; Chairman and Chief Executive Offi cer, MPI Research, Inc.; Director, Monsanto Company; Director, Taubman Centers, Inc.

Kevin A. Lobo

President and Chief Executive Offi cer, Stryker Corporation

Roch Doliveux, D.V.M.† ‡

Chief Executive Offi cer and Chairman of the Executive Committee, UCB S.A.

Srikant M. Datar, Ph.D.* **

Arthur Lowes Dickinson Professor at the Graduate School of Business Administration, Harvard University; Director, Novartis AG; Director, ICF International, Inc.; Director, HCL Technologies, Ltd.

Louise L. Francesconi * ‡

Former President, Raytheon Missile Systems; Former Vice President, Raytheon Company; Chair, Tucson Medical Center Healthcare Board of Trustees; Director, UNS Energy Corporation

* Audit Committee ** Finance Committee † Compensation Committee ‡ Governance and Nominating Committee

from left to right


DIVISION LEADERS

Xavier Berling

President, Europe

Peter Bradley

President, Japan; Interim Vice President & General Manager, Eastern Europe, Middle East and Africa

Sharon W. Brown

President, Performance Solutions

James N. Heath

President, Instruments

William J. Huffnagle

President, Reconstructive

Vivian Masson

President, Osteosynthesis

David A. Murphy

President, Americas

Phillip S. Nicholl

President, Asia Pacifi c

Mark H. Paul

President, Neurovascular

J. Andrew Pierce

President, Endoscopy

Bradford L. Saar

President, Medical

Spencer S. Stiles

President, Spine

Brian J. White

President, Sustainability Solutions

ADDITIONAL INFORMATION

Independent Registered Public Accounting FirmErnst & Young LLPGrand Rapids, Michigan, U.S.

Transfer Agent and RegistrarAmerican Stock Transfer & Trust Company, LLCNew York, New York, U.S.

Shareholders needing information regarding their certifi cates or dividends should contact:American Stock Transfer & Trust Company, LLCOperations Center6201 15th AvenueNew York, NY 11219800 937 [email protected]

Investor ContactKatherine A. OwenVice President, Strategy and Investor Relations

Media ContactYin C. BeckerVice President, Communications & Public Aff airs

Business Development ContactBryant S. ZankoVice President, Business Development

Annual MeetingTh e Annual Meeting of Shareholders of Stryker Corporation will be held at the Radisson Plaza Hotel & Suites at Th e Kalamazoo Center in Kalamazoo, Michigan, on Tuesday, April 30, 2013, at 2:00 p.m. ET.

Stock ListingTh e company’s common stock is traded on the New York Stock Exchange under the symbol SYK.

Form 10-KTh e company fi les a Form 10-K each year with the Securities and Exchange Commission. Shareholders wanting a copy of the 2012 report may obtain it free of charge at www.stryker.com or request one by writing to:Investor RelationsStryker Corporation2825 Airview BoulevardKalamazoo, MI 49002

TrademarksTh e following trademarks or service marks of Stryker Corporation, its divisions or other corporate affi liated entities appear in this annual review: Complete Stroke Care, GetAroundKnee, Stryker, Surpass, System 7. All other trademarks or service marks are trademarks or service marks of their respective owners or holders.

Th e products referenced within this review may not all be approved or cleared for sale, distribution or use in all countries.

Diversity and InclusionStryker values an inclusive work environment that hires and engages a talented and diverse workforce. Achieving the full potential of this diversity is a business priority that is fundamental to our competitive success. We encourage and expect each employee to embrace our commitment to an inclusive workplace that is free from any kind of discrimination, retaliation or bias.

CHAIRMAN EMERITUS

John W. Brown

Chairman Emeritus and former Chairman, President and Chief Executive Offi cer of Stryker Corporation

CORPORATE OFFICERS

Kevin A. Lobo

President and Chief Executive Offi cer

Steven P. Benscoter

Vice President, Human Resources

Dean H. Bergy

Interim Chief Financial Offi cer and Vice President, Corporate Secretary

Jeanne M. Blondia

Vice President and Treasurer

Scott P. Bruder, M.D., Ph.D.

Vice President, Chief Medical and Scientifi c Offi cer

Lonny J. Carpenter

Group President, Global Quality and Operations

David K. Floyd

Group President, Orthopaedics

David G. Furgason

Vice President, Tax

Curtis E. Hall, Esq.

Vice President and General Counsel

Tony M. McKinney

Vice President and Chief Accounting Offi cer

Anne L. Mullally

Vice President and Chief Compliance Offi cer

Katherine A. Owen

Vice President, Strategy and Investor Relations

James B. Praeger

Vice President, Finance Training, Development and Internal Audit

Timothy J. Scannell

Group President, MedSurg and Neurotechnology

Elizabeth A. Staub

Vice President, Regulatory Aff airsand Quality Assurance

Ramesh Subrahmanian

Group President, International

LEADERSHIP

De

sig

n b

y A

dd

iso

n

ww

w.a

dd

iso

n.c

om

P

rin

tin

g b

y In

no

vati

on P

rin

tin

g &

Co

mm

un

icat

ion

s

financial overview

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2012 2011 % Change

Net sales $ 8,657 $ 8,307 4.2

Earnings before income taxes 1,705 1,686 1.1

Income taxes 407 341 19.4

Net earnings 1,298 1,345 (3.5)

Adjusted net earnings² 1,560 1,448 7.7

Diluted net earnings per share of common stock:

Reported $ 3.39 $ 3.45 (1.7)

Adjusted¹ 4.07 3.72 9.4

Dividends paid per share of common stock $ 0.85 $ 0.72 18.1

Cash and current marketable securities 4,285 3,418 25.4

¹A non-GAAP fi nancial measure. Th e most comparable GAAP fi nancial measure is diluted net earnings per share, which were

$2.44, $2.78, $2.77, $3.19, $3.45 and $3.39, in 2007, 2008, 2009, 2010, 2011 and 2012, respectively.

² A non-GAAP fi nancial measure. The most comparable GAAP fi nancial measure is net earnings.

For a reconciliation between these measures, refer to our Annual Reports on Form 10-K available on our web site at

www.stryker.com or at the SEC’s web site at www.sec.gov.

adjusted dilutednet earnings1

$ per share

dividends paid$ per share of common stock

cash flow provided by operating activities$ billions

’12’07

2.40

2.83 2.95 3.

33 3.72 4.

07

0.0

2.0

1.0

3.0

4.0

’12’07

0.22

0.33

0.50

0.60

0.72

0.85

0.0

0.6

0.3

0.9

’12’07

1.0

1.2

1.5

1.5

1.4

1.7

0.0

1.0

1.5

2.0

0.5

0.0

3.0

6.0

$8.7b

’92 ’12

FINANCIALHIGHLIGHTS

history ofrevenue growth$ billions

Stryker Corporation

2825 Airview Boulevard

Kalamazoo, Michigan 49002

269 385 2600

stryker.com

2012 annual review

www.stryker.com

2012 annual review - stryker stryker 2012 annual review. 1 2 3 4 5 6 8 9 10 11 12 7 10 11 12 the...

Documents